It doesn't seem too long ago when I was still receiving pocket money from my parents every week, and a bowl of wanton mee from the canteen only cost $1.
Fast-forward to today and I'm the one giving them an allowance. For those of you who have just started working like myself, a monthly sum of a few hundred dollars is our way of supporting our parents financially.
That's just the tip of the iceberg
But taking care of them is so much more than a bank transfer every month. This only dawned on me last year, when I helped my mum and dad set up their second factor authentication (2FA) and access their CPF statements online.
I provided my reliable on-site technical support as always (the whole family enjoys access to Spotify too!) and they were able to log in in no time. Turns out they wanted to check on their Retirement Account balances after celebrating their 55th birthdays earlier this year.
While I was taking the first steps in my career, it never crossed my mind that my parents were already this close to their golden years. This incident led to a lengthy conversation about their retirement, as I was curious to find out what they were planning to do and if I could support them in any way.
Goodbye daily grind, but hello to what?
Earlier this year, my friends and I pooled a sum of money to buy tickets for the Toto Hongbao Draw 2017 in the hope we could strike $12 million and retire right away. You already know how this story ends, but even if we did win I wouldn't have the faintest idea what to do in my 'retirement'.
My parents, however, understood that retirement wasn't just about not having to work anymore – it meant the freedom to do the things they always wanted to do.
For my dad, this is scuba diving. He had been fascinated by what lies beneath the sea since our first trip to the now-defunct Underwater World, but never pursued this expensive hobby with my tertiary education on the horizon.
Now that I've graduated and begun repaying my dad bit by bit, he is already holding his breath in anticipation. My mum intends to tread those clear waters with him too, as soon as she conquers the deep pool at the swimming complex.
Lesson 1: Have a clear idea of what you want your retirement to look like
Putting a number on it
A basic diving course sets you back somewhere between $500 and $1,000. Add to that the cost of frequent trips to islands in the region and swimming with the fishes isn't exactly that affordable.
This was no surprise to my parents though. How much this would cost them on top of their daily expenses had already factored into their financial preparation for retirement.
While they aren't intending to dine at fancy restaurants and get around by taxi every day, my parents still wanted to ensure they have enough savings to have a reasonably comfortable retirement. Based on their plans, each of them should be working towards a monthly retirement income of around $4,000.
This would be hard for my parents to achieve, if not for the firm foundation of CPF LIFE they have built over the years. The last we checked, my parents have already set aside $249,000 – the Enhanced Retirement Sum applicable to them – in each of their Retirement Accounts at 55. This provides them with $1,860 - $2,000 every month when they join CPF LIFE with the Standard plan at 65, so they only have to supplement this with another $2,000 from other financial instruments to achieve their goal.
With everything going according to plan, there remains one last decision for my parents to make with regard to their retirement. While they have glanced through the two CPF LIFE plans – Basic and Standard – available to them, my parents have yet to come to a conclusion as to which is most suitable for their needs. What's more, they will have another choice in the form of the Escalating plan come January 2018.
It may be another 10 years before my parents have to pick a plan, but I plan to initiate a discussion by sharing
this helpful video about CPF LIFE with them next week. Their choice will affect the amount of payouts they receive, so they need to have a clearer understanding of the different plans in order to make any necessary arrangements ahead of time.
Lesson 2: Find out how much you need in retirement and work towards it as soon as you can
The greatest source of wealth
The last time my parents went to the hospital was only a few months back. It was for a routine health screening though; they've never suffered from any major illness or condition.
But past history may not be the best predictor of future health, especially in old age. To prepare for the medical expenses that could come with an unexpected emergency, my parents have already secured sufficient insurance coverage.
On the flip side, keeping fit is what I've been helping my parents with. I've just introduced them to the various bike-sharing services recently launched in Singapore and we are intending to (finally) get some cardio done as a family this weekend. Some degree of perspiration is required so they can stay healthy enough to enjoy their golden years.
Lesson 3: You can only fully enjoy the fruits of your hard work if you continue to stay active and healthy
It'll be our turns eventually
I probably won't get to retire for another 20 to 30 years (and that's a rather conservative estimate), but the lessons I've learned from my parents have already inspired me to start planning for the long run. No reason for us to be caught unprepared when the time does arrive!
Jia Ming is a full-time writer whose life stories have been featured in numerous Chinese compositions since the 90s. He hopes to wake up to bright and breezy mornings every day, but that rarely happens.